August 2018 Import Price Year-Over-Year Inflation Moderated

Year-over-year import prices significantly declined whilst export price inflation also significantly declined.

Analyst Opinion of the Import / Export Price Situation

Month-over-month price index for fuel imports significantly declined (and non-fuel imports modestly declined) – and food exports increased.

Import Oil prices were down 3.9 % month-over-month, and export agricultural prices were up 0.2 %.

There is only marginal correlation between economic activity, recessions, and export/import prices. Prices can be rising or falling going into a recession or entering a period of expansion. Econintersect follows this data series to adjust economic activity for the effects of inflation where there are clear relationships.

Econintersect follows this series to adjust data for inflation.

Year-over-Year Change – Import Prices (blue line) and Export Prices (red line)

There are three cases of deflation outside of a recession – early 1990?s, late 1990?s, and mid 2000?s. Import price deflation is normally associated with strengthening of the dollar relative to other currencies.

According to the press release:

All Imports: Import prices declined 0.6 percent in August, the largest monthly drop since the index fell 1.3 percent in January 2016. The August decrease followed a 0.1-percent decline in July and was only the third monthly drop over the past 12 months. Prices for U.S. imports advanced 3.7 percent from August 2017 to August 2018 and have not recorded a 12-month decline since October 2016.

All Exports: Prices for U.S. exports decreased 0.1 percent in August, after declining 0.5 percent in July. The July downturn was the first monthly drop since June 2017. In August, lower prices for nonagricultural exports more than offset higher agricultural prices. The price index for overall exports advanced 3.6 percent for the year ended in August and has not recorded a 12-month decline since a 0.2-percent decrease in November 2016.